Monthly Archives: November 2007

One of the most notorious medical scams recorded its first significant conviction today in California. Outpatient surgeon William Wilson Hampton, pictured here, was found guilty of one count of health care fraud. Dr. Hampton and two other surgeons from Unity Outpatient Surgery Center in Southern California are accused of masterminding a horrific plan to entice low-income people from around the country to travel to California to have unnecessary — and sometimes very risky — surgeries. All so the three could enrich themselves at the expense of insurance companies and health plans.

And this scheme seemed to work well. They hired runners who recruited “patients” from nearly every state, enticing them with cash and free vacations to California. By one account, the center performed more than 1,000 unnecessary surgeries and is part of a larger scam that has billed insurers for nearly $100 million. The FBI says its the biggest healthcare fraud scam it’s ever encountered. When the case broke in May, county DA Tony Rackauckas lamented:

“It is unfathomable that a doctor would treat patients as if they were bodies on a medical conveyor belt for a quick buck.”

Insurers and government fraud-fighters were slow to catch on to this scheme. It flourished a long time before it was shut down. Hopefully fraud fighters will use this case to understand how others may be operating and develop red flags to increase detection.

Today’s conviction is far from a complete victory for prosecutors. Hampton was acquitted of one charge and jurors deadlocked on 10 others. Prosecutors say they’ll decide next week whether charges will be re-filed.

But at least the one that struck answers the question of guilt. The big question that remains, though, is why a seemingly intelligent person who has the gift to become a surgeon and a healer — and earn a great living — would jeopardize it all and cut people open for the sake of a few dollars. It’s baffling.

Are reward programs and fraud hotlines worth the time, effort and money? Several states and even a few insurers sponsor them, but there is little empirical evidence about how effective they may be.

My thoughts turned to rewards and hotlines upon hearing an encouraging story at last week’s fraud directors conference. Some time ago, two Florida state fraud investigators were interviewed on a local radio show in Miami, and appealed to its Hispanic listeners to resist the easy $400 to $500 dollars they are routinely offered to act as passengers in staged auto crashes. Would-be fraudsters were told they could gain much more — up to $25,000 from the state’s reward program— by turning in the runners who were setting up accidents and enticing people to participate.

The appeal appeared to work. By the time the investigators left the radio interview and arrived back to their office, more than 200 calls had been logged into the state hotline. No word how many of those calls ended up becoming useful investigative leads, but no doubt some were.

Not everyone who calls a fraud hotline is looking for a quick buck. Some are disgruntled spouses or jilted lovers. Others are just looking to do the right thing.

I have the privilege of serving on a committee that reviews award applications for the program sponsored by the Virginia State Police. The cases there are nominated by state fraud investigators based on witness cooperation and size of case. Some of these stories are inspiring. People risk life and limb to aid investigations, and many of these cases wouldn’t go forth if it wasn’t for these witnesses stepping forward and providing useful information — and even court testimony — that helps to bring justice to insurance fraudsters.

I especially like the Virginia program because its promoted prominently throughout the state. Rewards programs not only serve to aid investigation. Just the fact that they exist, they also serve as a deterrent for many. Knowing that a neighbor, co-worker or ex-spouse can enrich themselves at your expense should help some people think twice about committing fraud.

Fraud fighters need all the tools they can muster. Reward programs and hotlines are two additional weapons every state should consider.